DSS building sits empty after senior housing project falters

Hopes of turning the abandoned Haywood County social services building into low-income senior apartments have been dashed, leaving the county in a quandary over who else might want the building and what other uses it could have.

The county recently moved out of the massive, aging, five-story brick office building in Waynesville. The Department of Social Services had not only outgrown the building, but it was also deemed too dated and run-down to bother renovating.

A new life seemed to be in the cards for the building as a low-income senior apartment complex — but the $8.5-million project was contingent on lucrative tax credits to offset the expense of renovating the old office building. The county learned last week that the hoped-for tax credits have fallen through, and the project is off the table as a result.

Patsy Dowling, the director of the nonprofit Mountain Projects that was behind the plan, said the low-income housing is much needed in Haywood County. She said she is disappointed that the project was knocked out of the running for the tax credits.

“Our aging population is growing, and I thought it was a great thing to be proactive to meet the needs of the senior population in our community,” Dowling said.

County Commissioner Chairman Mark Swanger said the county is likewise disappointed — not only to fill a desperate need for low-income housing but because the county is left with a big, old building on its hands.

The tax credits for low-income housing projects are highly competitive. Only five to eight low-income housing projects in the mountain region will land the tax credits this year — out of more than 20 applications.

Mountain Projects withdrew its application for the old DSS building after realizing its score wasn’t high enough to make the cut. The other 26 applications it was up against all had perfect scores.

The downfall of the Haywood County project? It was too far from a grocery store or pharmacy — 0.7 miles instead of the required 0.5 miles.

“They are very strict about how close it is in proximity to major services,” said Dowling.

The old DSS office building was just short of the criteria, costing the project critical points on its application.

“It is not an equitable system,” Swanger said of the tax credit criteria. “It seems very arbitrary when you are looking at rural areas.”

Blueprints called for renovating the old DSS building into 54 apartments, with a mix of one- and two-bedrooms. The total project cost was $8.5 million, including cost of the property and construction.

The tax credits would have amounted to $6.7 million — dramatically lowering the total cost to just $2 million. Indeed, that’s what made the project feasible. The developer partnering with Mountain Projects to do the project would have a very small mortgage in the end, allowing them to charge lower rents.

“The project doesn’t work without the low-income credits,” said Hollis Fitch, president of Fitch Development, a low-income housing developer based in Charlotte.

Fitch works across the state and regularly taps the low-income housing tax credit pool.

“It is a competitive process,” Fitch said.

Fitch’s group had put more than $60,000 into the design and planning for the Haywood project, including blueprints.

After Fitch and Dowling realized they were up against 26 projects with perfect scores — leaving no hope of snagging one of the five to eight slots — Dowling withdrew the application to save on the $5,000 non-refundable application fee.

While Mountain Projects could theoretically apply again another year, Dowling doesn’t anticipate the competition will getting any easier.

With the building not getting any closer to a grocery store, it is hard to see how it would ever land the tax credits needed to pull off the project.

“The building is where it is. We can’t move it any closer,” Swanger said. “Unless there is a dramatic change in the way in the North Carolina Housing Authority ranks its points, the chances would be remote.”

Indeed, getting that criteria changed is the only hope of jump--starting the project at this point. Swanger said he plans to take the issue up with state legislators.

Going once, going twice?

For now, the 70,000-square-foot building is officially for sale, with a price tag in the neighborhood of $1.25 million.

That’s what the developer working with Mountain Projects was going to pay the county, Swanger said.

The central offices for Haywood County Schools are still located in the building but would move out if and when it sells.

Typically, the county would sell property to the highest bidder. But, it doesn’t necessarily have to. The county could opt to sell it for a lower price to a nonprofit entity if it would in some way serve the public interest, as was the case with the sale to Mountain Projects.

Likewise, the county does not want to sell it to someone who will simply park on it as an investment.

“There would be a due diligence on our part to make sure that it is to a responsible party who will not allow it to just deteriorate and become an eyesore or safety hazard,” Swanger said. “You also don’t want someone to buy it at a very low price just to flip it.”

Obviously, the price tag to buy the property would only be part of the necessary investment from a buyer. Almost any use would require renovations.

Of the $8.5 million projected estimated cost to pull off the low-income apartments, $5.3 million was for construction, Fitch said.

The building was originally constructed as a hospital. The layout — long hallways lined with dozens of tiny rooms — isn’t conducive to many uses without major renovations. Age isn’t exactly on its side either. Part dates to 1927 and the rest to the 1950s — a whopping 72,000 square feet in all.

And, the building isn’t in the best shape either. Its sheer antiquity aside, the county scraped by on its maintenance during the years, spending the bare minimum to keep the building from falling into disrepair — but no more.

Now that it is mostly empty, a county maintenance worker is making twice-daily rounds through the building to make sure there are no water leaks, broken windows, varmints or vandals. The county has kept the utilities on. It can’t shut off the water since the school system is still occupying the front portion of the building. The heat is also being kept on, albeit at a cool 48 degrees, to avoid building shock from wild temperature fluctuations.

“To let it deteriorate further is something we would like to avoid,” Swanger said.

In hindsight, the county hasn’t exactly been the best cheerleader for the building. County commissioners repeatedly talked up the building’s short-comings when debating whether to move out.

The county relocated DSS to a repurposed office complex inside the former Walmart.

Haywood County in the real estate business

The old DSS building isn’t the only former office complex Haywood County government is trying to unload. County Manager Marty Stamey joked that it seems like he has a part-time job as real estate agent these days.

After moving several county departments once spread out in three separate office buildings under one roof at the repurposed former Walmart strip mall, the county is now looking to sell the three office complexes.:

• Annex II (board of elections/planning department): $1 million

• Annex III (health department)/annex III: $1.5 million

• Board of elections/planning department/ annex II: $1 million

• Former DSS (old hospital): $1.25 million

The buildings known as annex II and III on the Old Asheville Highway were originally medical offices, but when the old hospital moved out of its former building, doctors likewise moved their practices closer to the new hospital.